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SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) July 30, 2007
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Pope Resources, A Delaware Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 91-1313292
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19245 Tenth Avenue NE, Poulsbo, Washington 98370
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (360) 697-6626
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
INFORMATION TO BE INCLUDED IN THE REPORT
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Item 2.02: RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 30, 2007 the registrant issued a press release relating to its earnings
for the quarter and six months ended June 30, 2007. A copy of that press release
is furnished herewith as Exhibit 99.1.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Description
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99.1 Press release of the registrant dated July 30, 2007
SIGNATURES
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Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
DATE: July 30, 2007 BY: /s/ Thomas M. Ringo
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Thomas M. Ringo
Vice President and Chief Financial Officer,
Pope Resources, A Delaware Limited Partnership,
and Pope MGP, Inc., General Partner
Exhibit 99.1
Pope Resources Reports Second Quarter Net Income of $4.8 Million
POULSBO, Wash.--(BUSINESS WIRE)--July 30, 2007--Pope Resources
(Nasdaq:POPEZ) reported net income of $4.8 million, or $1.01 per
diluted ownership unit, on revenues of $15.3 million for the second
quarter ended June 30, 2007. This compares to net income of $3.5
million, or 74 cents per diluted ownership unit, on revenues of $15.6
million for the comparable period in 2006.
Net income for the six months ended June 30, 2007 totaled $5.7
million, or $1.19 per diluted ownership unit, on revenues of $22.1
million. Net income for the corresponding period in 2006 totaled $8.8
million, or $1.86 per diluted ownership unit, on revenues of $31.7
million.
Earnings before interest, taxes, depreciation, depletion, and
amortization (EBITDDA) for the quarter ended June 30, 2007 were $7.0
million, compared to $6.0 million for the second quarter of 2006. For
the six months ended June 30, 2007, EBITDDA was $8.8 million, compared
to $14.9 million for year-to-date 2006 results.
"Our operating results for second quarter 2007 were higher than
last year's comparable quarter primarily because our harvest volume
increased by 36%, from 17 million board feet (MMBF) in 2006 to 23 MMBF
in 2007," said David L. Nunes, President and CEO. "Log prices
generally softened during the second quarter given the decline in
domestic housing starts, but we were able to mitigate much of the
impact of this trend by virtue of locking in second quarter prices
earlier in the year when market sentiment was less bearish, and by
shifting our harvest mix toward select markets where pricing remained
healthier. As a result, our average realized log price increased by 4%
during the quarter, from $603 per thousand board feet (MBF) in 2006 to
$626 per MBF in 2007."
For the first six months of 2007, Fee Timber operating income
declined 5% to $9.7 million from $10.2 million in 2006. This decline
was driven by a 16% drop in harvest volumes, from 39 MMBF in 2006 to
33 MMBF in 2007. This was offset somewhat by a 1% increase in the
average realized log price, which rose from $606 per MBF in 2006 to
$611 per MBF in 2007. Through the first half of 2007, we harvested 60%
of our planned annual harvest volume, compared to the first half of
2006, when we harvested 71% of the total annual harvest volume.
Our Timberland Management & Consulting segment posted a
year-to-date operating loss of $0.3 million compared to income of $1.3
million in 2006. The decline in operating income from this segment is
the result of fewer assets under management in 2007 and a timberland
disposition fee earned in 2006 that was not repeated in 2007.
Operating income for our Real Estate segment declined from $0.2
million for the first six months of 2006 to a $1.0 million loss for
the comparable period in 2007. This anticipated decline is due to a
significant reduction in the number of land sale closings in the first
half of 2007 compared to the first half of last year. We expect to
generate revenue from our Gig Harbor and Bremerton projects during the
balance of 2007, but do not expect to reach the record level attained
in 2006.
The financial schedules attached to this earnings release provide
detail on individual segment results and operating statistics.
About Pope Resources
Pope Resources, a publicly traded limited partnership, and its
subsidiaries Olympic Resource Management and Olympic Property Group,
own or manage over 430,000 acres of timberland and development
property in Washington and Oregon. In addition, we provide forestry
consulting and timberland investment management services to
third-party owners and managers of timberland in Washington, Oregon,
and California. The company and its predecessor companies have owned
and managed timberlands and development properties for more than 150
years. Additional information on the company can be found at
www.poperesources.com. The contents of our website are not
incorporated into this release or into our filings with the Securities
and Exchange Commission.
This press release contains a number of projections and statements
about our expected financial condition, operating results, business
plans and objectives. These statements reflect management's estimates
based on current goals and its expectations about future developments.
Because these statements describe our goals, objectives, and
anticipated performance, they are inherently uncertain, and some or
all of these statements may not come to pass. Accordingly, they should
not be interpreted as promises of future management actions or
financial performance. Our future actions and actual performance will
vary from current expectations and under various circumstances the
results of these variations may be material and adverse. Some of the
factors that may cause actual operating results and financial
condition to fall short of expectations include factors that affect
our ability to anticipate and respond adequately to fluctuations in
the market prices for our products; environmental and land use
regulations that limit our ability to harvest timber and develop
property; labor, equipment and transportation costs that affect our
net income; our ability to discover and to accurately estimate
liabilities associated with our properties; and economic conditions
that affect consumer demand for our products and the prices we receive
for them. Other factors are set forth in that part of our Annual
Report on Form 10-K entitled "Risk Factors." Other issues that may
have an adverse and material impact on our business, operating
results, and financial condition include those risks and uncertainties
discussed in our other filings with the Securities and Exchange
Commission. Forward-looking statements in this release are made only
as of the date shown above, and we cannot undertake to update these
statements.
Management considers earnings (net income or loss) before interest
expense, income taxes, depreciation, depletion and amortization
(EBITDDA) to be an important measure of operating profitability,
particularly when comparing results between different timber-owning
companies because there are varying methods of calculating depletion
expense under GAAP. With different issuers employing various
calculation methodologies, disclosure of EBITDDA can make it easier
for the reader to make meaningful comparisons between the operating
results and cash-generating capabilities of different timber
companies.
Pope Resources, A Delaware Limited Partnership
Unaudited
CONSOLIDATED STATEMENTS OF OPERATIONS
(all amounts in $000's, except per
unit amounts)
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
Revenues $ 15,326 $15,610 $22,113 $ 31,693
Costs and expenses:
Cost of sales (6,294) (8,414) (9,131) (14,839)
Operating expenses (4,080) (3,461) (7,342) (6,934)
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Operating income 4,952 3,735 5,640 9,920
Interest, net 18 (217) 27 (526)
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Income before income taxes and
minority interest 4,970 3,518 5,667 9,394
Income tax provision (10) 8 (17) (437)
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Income before minority interest 4,960 3,526 5,650 8,957
Minority interest (145) 14 19 (119)
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Net income $ 4,815 $ 3,540 $ 5,669 $ 8,838
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Average units outstanding -
Basic 4,685 4,641 4,675 4,638
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Average units outstanding -
Diluted 4,786 4,753 4,776 4,750
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Basic net income per unit $ 1.03 $ 0.76 $ 1.21 $ 1.91
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Diluted net income per unit $ 1.01 $ 0.74 $ 1.19 $ 1.86
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CONSOLIDATED BALANCE SHEETS
(all amounts in $000's)
June 30, December 31,
2007 2006
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Assets:
Cash $ 6,146 $ 7,194
Short term investments 25,000 25,000
Other current assets 10,705 8,933
Roads and timber 95,814 98,110
Properties and equipment 42,207 39,026
Other assets 1,490 2,019
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Total $ 181,362 $ 180,282
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Liabilities and partners' capital:
Current liabilities $ 13,341 $ 14,775
Long-term debt, excluding current portion 29,543 30,866
Other long-term liabilities 46,867 47,036
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Total liabilities 89,751 92,677
Partners' capital 91,611 87,605
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Total $ 181,362 $ 180,282
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RECONCILIATION BETWEEN NET INCOME AND EBITDDA
(all amounts in $000's)
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
Net income $ 4,815 $ 3,540 $ 5,669 $ 8,838
Added back:
Interest, net (18) 217 (27) 526
Depletion 2,038 2,119 2,749 4,692
Depreciation and amortization 197 175 399 359
Income tax expense 10 (8) 17 437
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EBITDDA $ 7,042 $ 6,043 $ 8,807 $14,852
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RECONCILIATION BETWEEN CASH FROM OPERATIONS AND EBITDDA
(all amounts in $000's)
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
Cash from operations $ 7,718 $ 7,858 $ 6,907 $12,313
Added back:
Change in working capital - 1,522 2,368 5,682
Interest - 217 - 526
Deferred revenue 260 - - -
Minority interest - 13 19 -
Deferred taxes - 36 - 19
Income tax provision 10 - 17 437
Less:
Change in working capital (673) - - -
Interest (17) (26) -
Deferred revenue - (666) (77) (941)
Cost of land sold (14) (2,856) (46) (2,869)
Equity based compensation (103) (72) (361) (195)
Minority interest (145) - - (120)
Income tax provision - (8) - -
Other 6 (1) 6 -
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EBITDDA $ 7,042 $ 6,043 $ 8,807 $14,852
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SEGMENT INFORMATION
(all amounts in $000's)
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
Revenues:
Fee Timber $ 14,614 $10,449 $20,806 $24,173
Timberland Management &
Consulting (TM&C) 356 544 708 2,568
Real Estate 356 4,617 599 4,952
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Total 15,326 15,610 22,113 31,693
EBITDDA:
Fee Timber 9,266 6,195 12,629 15,071
TM&C (149) 71 (259) 1,250
Real Estate (419) 629 (936) 324
General & Administrative (1,656) (852) (2,627) (1,793)
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Total 7,042 6,043 8,807 14,852
Depreciation, depletion and
amortization:
Fee Timber 2,122 2,181 2,916 4,825
TM&C 20 20 41 36
Real Estate 43 43 87 77
General & Administrative 50 50 104 113
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Total 2,235 2,294 3,148 5,051
Operating income/(loss):
Fee Timber 7,289 4,014 9,694 10,246
TM&C (169) 37 (300) 1,333
Real Estate (462) 586 (1,023) 247
General & Administrative (1,706) (902) (2,731) (1,906)
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Total $ 4,952 $ 3,735 $ 5,640 $ 9,920
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SELECTED STATISTICS
Three months ended Six months ended
30-Jun-07 30-Jun-06 30-Jun-07 30-Jun-06
Log sale volumes (thousand
board feet):
Sawlogs
Douglas-fir 15,991 11,842 23,106 28,282
Whitewood 2,922 1,149 3,713 3,145
Cedar 575 227 635 586
Hardwood 878 1,144 1,007 1,706
Pulp
All species 2,241 2,288 4,185 4,964
--------- --------- --------- ---------
Total 22,607 16,650 32,646 38,683
========= ========= ========= =========
Average price realizations
(per thousand board feet):
Sawlogs
Douglas-fir 638 665 630 675
Whitewood 477 452 480 443
Cedar 1,333 1,182 1,320 993
Hardwood 945 670 910 646
Pulp
All species 398 260 430 255
Overall 626 603 611 606
Owned acres (A) 140,294 117,435 140,294 117,435
Acres under management 292,647 291,925 292,647 291,925
Capital expenditures ($000's) $ 3,101 $ 2,713 $ 4,410 $ 4,148
Depletion ($000's) $ 2,038 $ 2,119 $ 2,749 $ 4,692
Depreciation ($000's) $ 197 $ 175 $ 399 $ 359
Debt to total capitalization 25% 31% 25% 31%
(A) 2007 acres include 23,858 acres owned by ORM Timberfund I, LP.
QUARTER TO QUARTER
COMPARISONS
(Amounts in $000's
except per unit data)
Q2 2007 vs. Q2 2007 vs.
Q2 2006 Q1 2007
Total Total
Net income:
2nd Quarter 2007 $ 4,815 $ 4,815
1st Quarter 2007 854
2nd Quarter 2006 3,540
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Variance $ 1,275 $ 3,961
Detail of earnings variance:
Fee Timber
Log price realizations (A) $ 520 $ 1,085
Log volumes (B) 3,592 7,264
Depletion 81 (1,327)
Production costs (989) (2,145)
Other Fee Timber 68 4
Timberland Management & Consulting
Management fee changes (77) (1)
Other Timberland Mgmnt & Consulting (129) (37)
Real Estate
Land sales (1,370) -
Other Real Estate 326 103
General & administrative costs (804) (681)
Interest expense 96 38
Other (taxes, minority int., interest inc.) (39) (342)
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Total change in earnings $ 1,275 $ 3,961
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(A) Price variance calculated by extending the change in average
realized price by current period volume.
(B) Volume variance calculated by extending change in sales volume by
the average log sales price for the comparison period.
CONTACT: Pope Resources
Tom Ringo, VP & CFO, 360-697-6626
Fax: 360-697-1156